March 1, 2015

«Energy Security in Our State is Underestimated!»

Bohdan I. SOKOLOVSKYI, сandidate of physic and mathematic sciences, former Representative of the President of Ukraine on International Energy Security.

- Bohdan Ivanovych, your comments on the energy independence of Ukraine, can be considered the most objective ones. And let's say this: You do not just comment on the situation, but competently advise what the current government should do to fix our energy market's problems. Listening to your warnings, I even thought of Hegel, who claimed that what is reasonable is invalid. That is, to achieve something in our situation, we need to make efforts professionally. Well, based on your experience, do they in Ukraine realize the importance of energy security? What immediate steps have to be taken at the legislative and executive levels and how to monitor their execution?

- The question is bulky, but I will start answering from the end. In my opinion, energy security in our country is underestimated. Especially today. Why so? I think it needs to be considered at the level of Security Forces — Army, Intelligence, Police, Security Services — it is the security basis of any state. And so is energy security. Because if it is given proper attention, everything else in the state, in particular, the economy will come with time. If not, the existence of the state is in question. I am not an expert on military matters, so I will talk specifically about energy security.

There are three main branches in the fuel-energy sector — electricity, oil and gas. Today, gas is much talked about. You know, we in Ukraine now suddenly all become experts on two issues — gas and football. And no one mentions oil, let alone electricity. Even some mayors of cities, such as the Mayor of Kyiv, have offered to switch from gas to the use of electrical energy. Do they realize that in the import of electricity we are more dependent on Russia than in gas?

At present, for each of the three directions I have mentioned in the energy it is necessary to urgently take concrete measures. With gas everything is absolutely clear: it is necessary to reduce its consumption. We produce about 20 billion cubic meters, and consume 50. This is wrong, no matter from where we import gas — from the East or West, North or South. We need to reduce consumption and to live in accordance with our capabilities. That is, to build up our own production. Though, mind you, it can't be doubled.

- Won't an increase in the gas price influence the reduction in its consumption?

In the sector of gas consumption, the basis for reduction is transparency. We live with the Soviet mentality, when opacity prevailed in everything. Then, by the way, there was less corruption, less misuse in the energy sector because there was fear. Now — on the contrary. I have already said that, first of all, we must introduce the same price for everybody. At the moment we have five prices or more. If there were one and only for everybody, as it is in many countries, from which we should take an example, then corruption would disappear automatically.

We need to cancel cross-subsidization. We have no right to “feed” state structures, such as “Naftogaz of Ukraine”. Tell me in what countries which we see as models, there are state-owned gas companies, like the NJSC? I have been told — there are in Brazil and somewhere in Africa. As I understand it, we do not follow cue from Brazil or Africa. We have different goals, mentality, tasks, and so on.

- Experts from the West are not surprised with our NJSCs, are they?

- Oh yes, they are. I have heard recently that the EU, Brussels have been talking of a coordinated approach to energy prices, energy carriers transit and so on. In this regard, I would like to remind you that in 2008, the then our President had and was actively promoting such an idea. At that time there were talks about development of common approaches to the transit of energy carriers, creation of a sort of Caspian-Black Sea-Baltic energy transit space including a number of EU countries and Ukraine. Transit was supposed to be transparent in order to be able to trace at any moment every cubic meter of gas and every liter of oil and their location. There were proposals to agree on transit fees. But at that time it was very difficult to negotiate with the European Union. And today it is one of the most important topics. It is presented as the European Union's idea, although we were the first to offer it. Why did so few countries hear us? Only a few countries from the EU, Caucasus or Trans-Caucasus did.

Another important sphere is oil and oil refining. In Ukraine, in addition to state refineries, there are 6 large privatized former Soviet oil refineries, mostly idle. Last year, only one worked. And with 20 % loading. Frankly, we, at our not modernized plants, are producing oil Euro-2 (although certain corruption schemes write that Euro-3. But not the Euro-4 or 5). Who today would dare fill the tank of his car with such petrol? They fill in with the best, produced in Belarus, Lithuania, Poland and Romania. But let us look at the other aspect, which no one wants to mention: all our motorway filling stations import petrol and diesel fuel, made from Russian oil.

If Russia wanted, it would put forward condition to each of directors of such oil refineries — to cancel supply of petroleum products to Ukraine. In case of fulfilling this condition, supply of Russian oil to refineries will stop. Imagine the situation when suddenly fuel disappears at Ukraine's refilling stations!

- Do we have an alternative? Apart from Azerbaijan...

- It is necessary to build our own refineries. And to build refineries on which Ukraine as the state would have influence. That is, the state should enter the market with its quality products. Of course, we can modernize our old plants, but it is not economically profitable.

- Explain — why? It would be logical.

- Firstly, nobody would give a loan to modernize. Secondly, it is just unrealistic, because it is too late to do it. Twenty years ago it would have been a logical thing to do, like Belarus or Lithuania did it, but not today. It is very difficult to get the owner of the plant to invest heavily into upgrading without government support.

- And if the state does help?

- Then another such owner will ask: why did the assistance was allocated from the budget to that owner and not to me? When a new plant is built, then everything is much easier and more logical.

- Construction of a new plant depends on the decision of the government, does it not?

- All this had been worked out and calculated on the initiative of the then President of Ukraine in 2007. Three countries were interested in that, Ukraine included. Everything had been agreed, calculated, funding included.

- How much?

- At the time — 4-5 billion US dollars. Today I do not know how much the construction of such a plant will cost. Unfortunately, the project was not implemented, but it is worth returning. And preferably at the level of the Head of the State.

- Is it because private owners of our refineries “won't be bothered” knowing that in this case they will lose everything?

- I totally agree with you. You know if everything had been worked out and taken into consideration — the place for constructing such a petrochemical complex, supply of raw materials, its diversification. Its main and spare options. As the place for the plant had been chosen a town in Lviv region — Novyi Rozdol. Not far from oil pipelines, with lots of labor force, knowing the work of oil refineries. There are specialists of the Ukrainian oil refinery school there. Today we import oil products from abroad, creating jobs in other countries.

By the way, our school, the oldest in Europe, is not in demand because of our folly. In Drohobych oil refining has been done for more than 150 years! Later there appeared Nadvirna in the Carpathians, in Soviet times the work on oil refinery began in Poltava, Odesa and Luhansk regions. This is the Ukrainian refinery school.

- It is clear that it is necessary to do it routinely, otherwise we may lose everything!

- I repeat: if the Russians had to excite our Ukrainian society, they could do it easily: by stopping the supply of petroleum products. Imagine the scene: in Ukraine suddenly emptied all refueling stations. Once, in the early nineties, this has already been observed. Prices for all goods and services will immediately grow to the Moon!

Take another industry — supply of electricity. Today it is still not clear if someone has done any inventory, which objects, in case of lack of electricity, can be temporarily switched off and which should be provided from the reserves. For example, hospitals, maternity homes. If nothing else, to replace the electricity produced at Nuclear Power Plants, which is about 100 terabat/hour for a year, then it would be like to replace all nuclear power generation with diesel 5-kilowatt stations, of which you will need more than three million pieces. The whole world simply does not have that many stations! Not to mention the environment and diesel fuel for them. Within three or four years, you can alleviate this problem. In what way? With the help of new nuclear reactors. The ones we have now are of Russian make. Eventually, when they are no longer used, they must be replaced. And here very useful for us would be, for example, Canadian ones. At some point in Ukraine, this question had already been worked on. Once again, it was initiated by A. Yatsenyuk, when he served as Minister of Foreign Affairs. What is so special about Canadian technologies? Apart from their being not Russian. They just burn everything. They do not need enriched uranium, for which we will never get permission. Romania has not bad experience in this aspect.

- Since A. Yatsenyuk initiated it, then it was necessary, right?

- At the time, a Commission was created, which included well-known scientists, experts from Mintoplivenergo, Energoatom. Conclusions were drawn. Today there is a need to return to this issue. But without political pathos. For example, our reactor has completed its life — it should be routinely replaced with a new one. The terms of its work should not be prolonged!

I remember once talked with my Chinese counterpart. He said that in China, Chinese, Russian, American, Canadian reactors work. I asked him: what will you do with this? He answers, jokingly: we'll arrange a socialist competition and define the best. And then he told me seriously: “You will not find in the world a country like yours, with so many reactors of the same type”. Even today we have 13 — VVER-1000 and 2 VVER-440, total installed capacity of 13.835 MW. All in all — 15. At the time, we used to have 13 “thousandths”, — more than in the whole Russia. We almost one hundred percent depend on it for oil and nuclear fuel. And if we do not take necessary measures, in a few years we will get insurmountable problems.

- Was it not possible in the past to start with the Russians a normal civilized conversation about how to address these pressing issues? For example, at the diplomatic level. After all, there are citizens soberly assessing the situation, understanding that there can be mutually beneficial solutions to problems.

- Diplomats were usually not allowed to energy issues. They learned about the arrangements, contracts or agreements already post factum. Personally I think it is very wrong. Was Russia working on these issues? Yes, it was. But it turns out that Russia is not to be trusted. This has been proved many a time, and not only regarding us. I remember one of the then President Viktor Yushchenko's visit to Russia in 2008. He spoke for over two hours with Russian President Vladimir Putin, in particular, trying to persuade him that the Russians and the Ukrainians are two peoples. That each of them has its own needs, not the same views on problems and so on. And Putin agreed with him. Was it so after Yushchenko — I do not know.

- You know, it is interesting: we live next to Russia, but one way or another, we will have some problems. Would it not be more correct to solve them at the negotiating table, without fists and tanks? Would it not be better to try and find profitable “common ground”?

- I can only speak about energy issues, about the power generating industry. In this sphere, there have been attempts to find, as you say, “common ground”. But the fact is that the Russians are using energy as a weapon to achieve their foreign policy goals. They do not hide it! If Russia were one of several our partners on energy issues, its behavior would be completely different. As it is, Russians know that they are monopolists...

- And won't even your personal friendly relations help here?

- I cannot say that I have such relations. However, the first who told me about problems in a private way was my Russian acquaintance. He says, “kickbacks” in Russia have reached 40 %, while in Ukraine — times more. Then the conversation was on the completion of two units at Khmelnytskyi NPP at a price much higher than the one at which Russia sells such equipment to other countries. The sum mentioned was 10 billion US dollars. I then wrote a great article about it in “Mirror Weekly”. China for the same two blocks paid Russia 1.7 billion US dollars! I was explained at the Energoatom that China saves at the completion as a lot of work is done by the Chinese. Sounds like we do not have the manpower! We can develop documentation, participate in competitions for the construction of nuclear power plants, build planes for the USA and NATO, implement the Japanese miracle, do something independently in case of necessity, but when it comes to specifics — we are not allowed to! China turns out to be more capable than we are, or what? After all, the difference in the means for the completion of the units is more than 8 billion US dollars!

And another question — do we need such units? Do we need this additional power?

- Is there anything more important in this topic?

- I think we need to do something about our power lines. Losses on Ukrainian power lines make more than 12 %. In Poland today about 9 %, in Germany — 6 %. On a par with Germany, we will not hold out, but we need to take an example of Poland. If we catch up with its figures, for us it will mean saving of one nuclear power plant unit, for example, KhNPP. Perhaps it is more beneficial to us? I do not mean that we do not need to build new units, but why not to try to effectively use what we already have? We should care about the effective consumption. Figuratively speaking, one should not put the cart before the horse — first we should sort out our power lines, and then we'll decide how powerful reactors should be. Instead, we rush to build something, with the Russians' help to all that.

- Therefore, we can once again state that a lot depends on leaders.

- Once, at the dawn of independence, late V. Chornovil said that we, Ukrainian patriots, do not claim to power, because we do not have the personnel for it. This was the main reason. I think he was right. I remember it well, although at the time I disagreed with him, saying that we were patriots, we could work for the good of our country, it was our responsibility!.. And it turns out that this is a very serious matter and it is not solved. I do not want to criticize anybody, but I admit that many of us need more professionalism. Tell me, please, how can the Russian Energy Minister Novak (by the way, our native from Donetsk) refer to our Minister of Energy that we deliver one and a half gigawatts of electricity. Since when is power supplied?! Any high school graduate knows that gigawatts measure power, but not the amount of electricity! And it is said by the Minister... You see, professionalism of officials should be felt even in nuances. Especially if the people trusted you to build the state. By the way, I think that our state has not yet been built. Compare the Ukrainian SSR and present-day Ukraine, and you will see that there are many similarities. What used to be decided by the Central Committee, now is decided by the Presidential Administration. What used to be done by Gosplan, today with the same methods is done by the Cabinet of Ministers. Even the number of regions has remained the same (we don't count now the annexed Crimea). 490 districts — there were and there are. The industrial structure has remained as it used to be. But it is no secret that the industry of the Ukrainian SSR worked for the benefit of the whole Soviet Union as part of the Union's industry. We used to have production, components for which came from Kamchatka. It is not profitable, but in the former Soviet empire questions were solved differently. Including how to keep a Ukrainian in subjection. Do we still need this?

The idea of ​​reformatting, in particular, of the industry of the Ukrainian SSR to the need for an independent Ukraine remains relevant. It has been so from the first days of independence. In 1992, the then People's Deputy (M.P.) I. Yuhnovskyi proposed to reform the whole of Ukraine, including the economy. I think he proposed to create 99 districts, to abandon the three-level system of governance.

Our chemical industry of that time, for example, had been producing 11 times more than we could consume. Metallurgy — 17 times more than Ukraine needed.

- We had stored so much fuel for military aircraft that rushed to sell it abroad...

- This reforming has never been implemented. We did not dare to close a number of companies in the East, and to develop current at the time IT technologies instead. Now, this niche is occupied, but there are other attractive options for development. During all the 24 years we have been closing businesses, workers have been fired out and now we have a result.

- It was fashionable to speak of one's love of the new Ukraine. And so it is today...

- In my opinion, the best program for the development of our young state was offered then by the People's Movement. The economic unit was worked on by professionals such as V. Chernyak, V. Lanovyi and others. They had a very serious approach to the development of the Ukrainian economy. We missed a lot that in Soviet times was supplied from the republics of Central Asia. Currently China supplies us with it. But we have not created anything our own, caring about jobs for foreign countries, not for our citizens.

Here is an example: after the war in France at some point was President Charles de Gaulle. He set himself the task and announced to all French citizens, that France should provide itself with everything it needed independently. That is, to be a self-sufficient state. Today it is self-sufficient by 80 %, while we are self-sufficient by 50 % or even less.

- And instead of our experts, we invite foreigners. Even for posts of Ministers.

- I do not want to comment on this. To put it simply: I am against. I have nothing against Georgia and Lithuania, but I know that our specialists have not been in such a role there. We, Ukrainians, can construct a helicopter, which will be assembled at the enterprises of America, we can create the Japanese economic miracle, but we cannot build our own state. I do not know, for example, what claims can one have to the former Minister of Finance Alexander Shlapak? Why was it necessary to replace him? Why to the posts of our Ministers have come foreigners who at home were not on the first cast? Why?

- Because those who were on the first cast, continue working on those roles in their own countries.

- The first reaction abroad to these things was as follows: who will respect you, Ukrainians? That is, if foreigners do not cope, what for were they invited? And if they do cope with the tasks, who will then respect you, if you are not able to help yourselves? Are these questions not logical? Out of more than forty million, we could not find someone who could self properly to our Motherland as a Minister! I think that is unacceptable.

- We do not hold our officials accountable if they do not fulfill the task, so how shall we hold a foreigner accountable?

- True. You can change yours daily until you find a decent one. Look at Poland, did any foreigner work on its development? In the entire history — never! It was difficult, but the Polish have coped. Regardless, was the Polish government in Poland or in exile, the country was always built by its citizens themselves.

- Yes, I can't disagree here. Wherever a Pole was thrown by fate during the war, but he always fought for his country.

- Inviting foreigners to the government was dictated so to speak, by the high rate of our events when you need to do something economically in a short time. And if that does not succeed, then what? Tell me, why our medicine has not taken any positive steps over all these months? Have medications become cheaper? Be that as it may, but we have had a new minister for several months now. And what is the result? Why have the promised reforms not been carried out? You see, reforms are carried out either within the first few months, or never. Having no breakthrough in the economy, we keep recording only shortcomings and failures. We have a war going on in two regions, but the economy is falling across the country. Why so? Our hryvnya has fallen sharply. How come? The national currency has fallen by more than 3 times, while the industry has fallen by only 20 %? One can put questions to infinity. Historically, it is necessary to go back to twenty years ago, and start all over again. Those who are responsible for specific matters of the state must understand the needs of this state, the needs of our people. It does not matter what one's nationality is. It is important that he/she is native of this state and is perfectly well aware of aspirations of his/her compatriots. That is how it works anywhere and everywhere and where there is no such awareness — there is no country.

- Our officials can be compared with venous congestion.

- Today, officials can be criticized or not, but the country must have a clear self-organization, because we won't cope with the existing problems if we let things slide. The vast majority of the population believed that with the abolition of the USSR, manna from heaven would fall on Ukraine, and everybody would live happily. But miracles do not happen. If not all members of a family behave themselves, then the whole family will have problems. The same in Ukraine. A lot of people neglect their civic duty, but dream of a wealthy life.

- Do we suffer because of our mentality?

- The mentality has been inculcated for many centuries by our “guests” encroaching on our territory. And now we have not clearly defined our social value. Therefore, we live the way we live. Compare residents of our East and West. They are different. Not worse or better. Just different. This is a fact. And there is no need to adjust one below the other.

You know, when my parents and grandfather were resettled in 1945-1947 from the Polish territory to Ukraine, none of the residents of the East try to protest against it, no one took up arms. And why should the people of Western Ukraine today die in the East? I'm not saying it's wrong, just wondering why? We still confuse ethnic and territorial, not trying to give an honest answer — what is the basis of our troubles. Why do we not say how it happened that in the East there are such anti-Ukrainian sentiments? Why Kuban, Western Galicia, Beresteyshchyna and many other ethnic Ukrainian lands are not Ukrainian? Why did hundreds of trains with immigrants from Russia once come to Ukraine? Due to this, today we have war, the annexation of the Crimea. We were so happy that gained independence without bloodshed! Mark my words: in several months the world will no longer remember about us. If nothing else, it will get tired of Ukraine! And we ourselves will be to blame. Do you believe that in the USA or Europe today, someone is interested in our problems? Believe me, no, no one is interested. If today the Germans have invested 15 billion Euros into the Russian economy, they want to profit from this and not to lose because of problems with Ukraine. And what can Ukraine offer them instead? Labour? They have their own labour. The same can be said about other countries.

Someone has aptly noted that Ukraine can establish itself only if Ukrainians themselves do it. As an example, you may look at the citizens of Israel, desperate to defend their land. Arise a danger — they first beat the attackers in the face, and only then try to find out who is to blame.

Here we were attacked, and we invent some conventions, formats — Geneva, Norman, Minsk ones and negotiate. The enemy should have been beaten off at once, by all means and only after that we could find out who those “polite military little men” in the Crime were and what they wanted? All talks about a bad army are a myth. If the army is bad, then a martial law had to be announced and all the citizens had to defend the country.

- Russia's is fighting on our territory, because it considers it its own. Neither America nor Germany do this, because they do not consider our territories theirs. That's all the explanation.

- The West simply does not know what should be expected from us. In particular, where we are going, whom we'll choose as an ally, and with whom we'll be enemies.

- Let's go back to what you had to do as a representative of the President on energy issues. You personally were able to do much on that post?

- I managed to do almost everything. But it cost very much. I mean health. True, it did not take long to persuade our then President of the importance of energy security. He had no doubt of the importance of our proposals, trying to do his best for the Ukrainian nation. But I will say that not all was in his power. After all, according to the Constitution his rights were limited. What he could achieve in the West, in particular, with the Poles, he was unable to carry out at home. He had his own faults, but he had done a lot of good to his country. I remember sometimes he was just tripped up, especially at the end of the cadenza. Because he wanted to be a democrat to all, and it does not end in good. But where it came to energy security, oil, he did not need to be talked into. Remember, when we started to really work with the Japan-US company Westinghouse, which owns many businesses in Europe? This company is willing and is able to produce nuclear fuel for our nuclear power plants.

- Who was behind that cooperation?

- One night I had to report to the President on the need to conclude a lucrative contract with the company. And he agreed. It was then, in 2008 that cooperation on two units of the Southern Ukrainian nuclear power plant began. All this has already been forgotten. Suddenly they agree that we need to start this work, that is, to change the Russian fuel for Westinghouse's production. This requires a lot of time — years. But on two units we did manage to do something useful! The other fifteen still need to be worked on. Now, a protocol of intent seems to have been signed.

- Domestic question: are our nuclear power plants reliable enough?

- In the Soviet times best of all was chosen the site for Khmelnytskyi NPP, everything had been taken into consideration, seismicity of the area and peculiarities of soil and environment included.

- Why have so many power plants, including nuclear ones, been built in Ukraine?

- Ukraine is next to the West, and in Soviet times, it was necessary to think of how to sell goods such as electricity most profitably. Today we have other problems. I would like to say this: we do not have our own professional nuclear school and related professionals. We still have them trained in Moscow. But Russia and Europe have created combined higher education institutions and even faculties for training on nuclear energy. We have not. Even during the first President we had been cherishing the idea of ​​creating our own school, but to no avail. We have good specialists on boilers (they are prepared by Odesa, Kyiv, Lviv Politechnical Universities) — all that relates to transformers, power lines and the like. Except the nuclear part. But the first “nuclear research steps” were made in Kharkiv. Kharkiv Phystech (Physical Technical) has made its contribution into this matter. This school could have been created long ago, we did have specialists for that, even if few. Was anybody interested in them? Or in what they thought?

- What about the role of such Authorized Representative, that we have just mentioned?

- If you are referring to me, I was interested. A lot had been initiated, but the story about it will be perceived as self-promotion. I asked people at Energoatom, at nuclear power plants, and at the Academy of Sciences. Reported to the President. Perhaps now something is being done about this, but so far I have not hear of it.

- All is shrouded in mystery. Because it has to do with nuclear reactions.

- But not everything should be available to the public, not more than 10 %. Why to make the society worry? If there is an emergency — there are relevant services, and they eliminate the faults.

- At the moment, the main theme of all TV channels is what, where, when something dangerous has happened.

- I do not want to unprofessionally comment on the events in the East, I am not an expert on military matters.

- Then let's talk about the sphere in which you are an expert. When you started the implementation of the Presidential Decree № 1863/2005, concerning matters of energy security of Ukraine. It was clearly set out there what, when and how has to be done. Most of the planned has been done, especially with regard to human resources. But in 2014, all these decrees, orders were canceled. For what reason?

- This question is to those who cancelled all decrees and orders. I will say this: the people, who came into power 5 years ago, did not give a damn to Ukraine and its people, let alone to the security of the state. Predecessors gave them not only the state but also the list of what, when and how to do to make Ukraine feel independent. Why they cancelled all the tried and tested — I cannot explain, because I do not understand. To do so one has to hate absolutely one's state and its people. Why not to develop our energy generating industry? For example, over the last five years has anyone visited Romania to study the experience there? Let alone a trip to Canada. Last time President of Ukraine spoke to the Canadian experts on nuclear power in 2008. Under Yanukovych nobody visited, under Poroshenko no one has traveled yet.

- And it may end in nobody going…

- Recently I met with a Canadian expert and he told me that all our cooperation remained at the level of 2008. Here is an approximate answer to your question. Not long ago the power had been in the hands of subjects seeing Ukraine as a project: “We'll make money, and then come what may”. You know, when the former chairman of one of the factions of our Parliament, now ringed with an electronic bracelet, said that such a nation as the Ukrainian does not exist, then what else needs to be explained? It would never ever occur to me to say so about any of the natives of wild African plains! And here it was said by a recent high rank governor.

A man with complexes can speak so…

- This citizen used to be the first cast in Luhansk, and I was with him at a reception. He made a positive impression on me... We talked for at least an hour, and I left the office in high spirits. I thought: if there are such respected and thinking individuals, everything will be all right with Luhansk region. And recently, I suddenly heard this from the TV screen! Is he a citizen of Ukraine according to his passport?

- You say that a lot in energy security depends on the opinion of oligarchs, heads of financial and industrial groups. Now is being developed the Energy Security Strategy until 2035, earlier we had Energy Strategy until 2030. Does it make sense to create a Strategy again when financial and industrial groups that control the fuel and energy complex of the state, there may have other considerations for its development?

- When talking about some kind of strategy, plans for development of some industries, I always ask: tell me, what is the strategy for the development of the state? When I understand what the state should be like, then I will perceive the strategy of some development. Power generating industry included. What sort of state it should be — with the Crimea or without the Crimea, with Donetsk or without Donetsk, with Kharkiv or without Kharkiv, with Odesa or without Odesa? What economy will it have? Then I will determine how many we need, for example, nuclear power plants, thermal power plants, what networks should we have, how many specialists are needed and at what age they should retire, and so on. If there is no such strategy, there is no point to talk about all this.

I have a lot of questions to the Development Strategy until 2030. Firstly, why was it adopted by the decision of the Cabinet? And the author of the Strategy is one and the same person, as well as are the lower-level experts who wrote this Strategy in both iterations. Tell me why this Strategy has not been adopted as a law by the Parliament of Ukraine, which is a must to fulfill? In particular, how many NPPs do we need?

As for justification. For example, in each district there is Directorate of Agriculture of six-seven officials. Even if their salary is small, what is their role now? In Soviet times there were collective farms, whose work was controlled, instructions on crops, harvest were given. And today? Yet such Directories are still numerous.

- At one time there was a post of the President's Authorized Representative for international issues of energy security. He had certain responsibilities, in particular, to monitor the implementation of this Decree. Is anybody doing this job now, controlling energy security? There are also Minenergougol, NSDC, and the Secretariat of the Cabinet. Each of them has specific functions. Would it not be more appropriate to specify the responsibility as trustee or as a separate professional structure?

- It is the concern of our highest leadership. How such a control is exercised today — I cannot tell. When I was leaving the post, I left all the necessary documents, developments. As for the control, with which I had to deal, my assistant and I jokingly called it “authorized for flight issues”, because we had to spend a lot of time on board a plane. I used to fly to Europe and America. Actually, I was involved in preparation of negotiations, documents for the Agreements, which the President had to sign. Such is diplomatic practice in all countries.

There was a lot of work. Sometimes it took a long time to explain to the President in detail the essence of the matter, especially on the eve of a meeting with foreign colleagues and signing of interstate documents. It is normal practice, because the President has to delve into the heart of the matter.

- How often do people from the President's Administration ask you for consultations?

- “Naftogaz of Ukraine” once asked after reading one of my publications. But the rest — never. I am not eager to offer anything. The current team most likely is well aware what it has to do. And what they have done, we have to estimate.

- But experts on energy security are few.

- I communicate only with those who never call a bolt a nut.

- Soon an Energy Forum will be held, which will bring together well-known experts. Who among them is interesting as a connoisseur of the problems of energy security?

- Recently a similar Forum was held in Poland. If we talk about our experts, then I would mentions A. Todiychuk and N. Honchar — experts on functioning of the oil transportation industry. If we talk about nuclear power, it is V. Chernov. He used to head Energoatom. He is highly respected by professionals, but few politicians turn to him on energy issues. Professionals of his level are few. Foreigners visiting us, in particular Americans, will not tell much, only what suits them. Russian officials are not worth believing. While our experts understand our problems, are able to make the right decisions, their advice is accurate.

- You know, listening to you now, I have remembered the book “Confessions of an Economic Hit Man”, by John Parker.

- Foreigners do not know much about our problems, and therefore they will say nothing. Russians, even if they do know, they will never tell. We need to do our job independently.

- What about the international project “Sarmatia”? It includes foreign companies — Azerbaijan, Georgia, Poland, Ukraine, and Lithuania. Maybe it is advisable to discuss such projects?

- As for the “Sarmatia”, it started when A. Todiychuk was at the head of “Transnafta”. In Poland, where “Sarmatia” is registered, its head is leading the right policy, but the Polish side's attitude to this project is quite reserved. Especially after the EU had withdrawn it from the list of priorities. The project is not supported by ORLEN — the largest oil refining company. You see, in my opinion, this not quite sincere attitude to us is mainly due to our being unpredictable in our actions. For example, we once promised Austrians to run the pipeline “Odesa-Brody”. They therefore began to build a branch from Bratislava to Vienna, where the refinery is situated. It is approximately 60 kilometers. And then we, it seems, in 2003, suddenly announce reverse through the pipeline. Austrians are shocked. How about the previous agreements? Some of them even were dismissed because of poor work of the Supervisory Board. After some time, the Austrians returned to this project because we again promised them our cooperation. And again a similar story. Once we had promised that we would sell the refinery “Galicia”. Austrians programmed for this the first tranche — 110 million Euros — to modernize the plant. Prime Minister at the talks in Vienna suddenly raises the question of the pipeline “Odesa-Brody”, and that we are going to transport raw materials from Azerbaijan through it. The Austrians were embarrassed because they were planning to use it for a modernized factory and were going to ask the Prime Minister to guarantee a quota in “Odesa-Brody”. Our side promised to arrange everything and to sign relevant papers. But, having arrived in Kyiv, the Austrians did not receive the promised. On their return from Ukraine, they asked me (I was working in Vienna), how could one work in such a way, and why we were so unreliable in matters of fulfillment of agreements? What should I have answered them? I just reminded that they were dealing with our Prime Minister.

- So, even based of those moments, somebody should be responsible for energy policy?

- Of course. But this should not be a formality. For example, Yuriy Prodan at the post of the Minister was well versed in the electric power generation, Ihor Didenko — in gas issues and so on. But the subjective factor should not be decisive here. No intrigues, there should be only statist approaches! But this is a topic for a separate conversation.

- You used to be in the diplomatic work. Were you happy with it?

- In Bonn, my duty was scientific work. Over time — also politics. But I had to simultaneously perform other specific assignments. In Europe, the attitude to diplomats and their activities is more attentive than, say, in the USA, where I also worked. For some reason it is much more difficult for diplomats even at the household level there. Americans, first of all, respect themselves, and then visitors, including diplomats. Your car may stand next to a dozen vehicles of local residents, but fine for the violation will be discharged only to you. And such a blatant disregard is very annoying. In Germany, this cannot happen in principle.

- Your work abroad was based on your professional activity on energy issues. This made it possible to establish direct links with foreign experts on energy issues. Can those links be considered complete and useful today?

- I would not say that this work depended solely on my education. It is wider, and this is understandable. As I have said, I was engaged in scientific work, then also politics. And from the beginning I had been paying much attention to the oil pipeline “Odesa-Brody” which in the 1990s was much talked about. True, I am sorry I did not manage to implement all our plans due to the fact that in Ukraine the “weather” kept changing. In the West, people often just shrug at our “creativity”. Frankly speaking, we had some high-ranking officials who having arrived at the border, without equivocation allowed themselves to say the following: “Give us money, and do not ask how we are going to use it”. After the departure of such our representative the Germans asked me: “What does all this mean?” It was difficult for me to explain.

Once to one of the embassies, where I was working, from Kyiv was coming to work one person of what I had been warned in advance. On the eve of his arrival, my foreign colleagues privately describe him as a “representative of the KGB”. We turned it into a joke, but… Even such jokes were unpleasant, because they testified to the “work” of our “northern brothers”. And today they especially do not hide their attitude to us. A lot of damage is caused by our citizens' unprofessionalism, when accidentally or through acquaintance they get to important posts. It is easy to guess about the results of their work.

- When during one of the recent events, the conversation was about the Energy Strategy until 2035, a respected expert, answering the question, said as follows: how can I explain something, if I am just an electrical engineer? So who is entrusted to make such important basic documents?

- In Soviet times, such things were done mainly by professionals. Remember, even prisoners in Stalin's times were returned to enterprises when it became clear that they were the only experts in their sphere. Unfortunately, we do not return back the fired. In general, we have a dismissive attitude to a person. Although officially we state the opposite. In reality today in any industry we are short of experts. Without them there will be no industry. How then can we build our state? See what's going on in our education system! What decisions are made in the Ministry of Education and what comes to the bottom? Will our engineer be harmed, for example, by knowledge of the history of Ukraine? Churchill, heading England during the war, once said: “What for are we fighting, if the culture has to move to the back yard”?

- So what has to be done to make our country at last pay attention to energy security?

- I have said many a time. As for gas, our main task is to reduce its consumption. We should have stopped buying it from Russia long ago. We must produce and use our own gas. All available resources — human, financial, technical, intellectual — should focus on this. You cannot drill a hole 5 kilometers deep, having the equipment only for the 3-kilometer depth. I did ask our leaders how it was possible to pay back Russia 4 billion US dollars for Yanukovych's debt? We are at war with Russia today, and at the same time we transfer funds for the long-standing contract! But the contract has a record about force majeure? Is a war not the case? Especially when we did not get the gas. There is even a mechanism to transfer the money to a mediator when he will give the money after the fulfillment of the conditions. But not before. This isa guarantee. If talking about the Russians, — well, take away your troops, return the Crimea and you'll get the promised by the contract funds. The question is: will the Americans or Germans be able to understand the logic of our decisions? You know, in England citizens used to be very fond of German cars and radios. After Hitler bombed London, within the same day the British government abandoned “Audi” and moved to other cars. Could the British then the transfer any money to Germans? Never! And we quietly give away to the aggressor almost four billion dollars. These same tools can be used in the East for conversion of the economy of Donetsk and Luhansk regions. The one, who put his signature under the approval, must answer for it.

If we talk about oil, it is necessary to build a petrochemical complex and refineries. In nuclear power industry, we need to go to a different type of reactors that allow to burn any fuel. Including waste, as we have plutonium. Not military, but from nuclear power plants, which needs to be sorted. No one will take it. Here, it is necessary to build such reactors as in Romania, and to get rid of the problem.

Each of the above-mentioned directions needs a lot of long-term work. A year is enough for inventory, and this should be done immediately.

- With regard to responsibility for calculations. The same doubtful story about the African coal? It also turned out to be still suitable for our power plants... Or the supply of electricity to the Crimean Peninsula.

- I've written in the media about the coal. African coal is not worse than Polish one. However, it is cheaper if you buy it directly in the port. Or coal from the Lviv-Volyn basin, production of which is up to 8 % of coal production in Ukraine. However, I do not understand why the purchase of African coal was criticized when later our President went to Australia to negotiate on coal. There exists a market, which is not influenced by the Australian Government or the Prime Minister. And what is the difference between African coal and that from Australia? Even the distance is not less. The situation is different with Kazakhstan, where President Nazarbayev has an influence on business and could help us buy the coal cheaper. But there the situation is influenced by Russians.

As for the quality, no coal will replace the Donbas one. After all, even in Soviet times, each power plant was designed for a specific type of a mine and its coal. Changing the type will change the efficiency of the station. Is the government developing a program of re-equipping stations? Or does it think someone else will do it? Today it is necessary to retrofit boilers of the stations so that they can consume the coal which is supplied. But this will take two to three years. And money.

I do not understand why we do not apply to the guarantors of our security — the USA or England — to help us cope with this problem? They also put their signatures under the guarantee document, didn't they?

Buying electric energy in Russia is a big mistake. Firstly, it itself does not have enough. Secondly, we are the victim of Russian aggression. We have to buy electricity from Moldova. To buy anywhere else, it is necessary to build a supply chain, and it also needs money and time. For example, the Poles themselves are looking for where to buy electricity.

- Last year, in August, you stated that we need to urgently prepare for the heating season. When is it necessary to begin preparations for the next heating season?

- This season we have overcome thanks to mild weather conditions. Although I do not consider successful the contract signed with Russia. Today, we need to sign a contract with Norway. Namely — with “Statoil”. It is the only company that is willing to support us. It actively competes with “Gazprom” for the European gas market. I did remind of this our decision-makers before their trip to Norway. Back in April, the Norwegians were taking into the sea four tower platforms for gas production, but none of us went there to establish cooperation. My former friend writes me: “You probably do not need the gas”. Before the trip I advised A. Kobolev: “You at least establish contacts. And then the matter will sort itself out”. Sadly, we have not used the opportunity. Because then the Russians would not be able to show us some far-fetched claims. We need up to 12 billion cubic meters of gas, and the gas hub Baumgarten in Austria, for example, may have not more than three extra. So, it is necessary to enter into contracts and use them to solve our gas problems. And it can be successfully carried out, if we do it professionally. And we must make agreements with the Norwegians today. One cannot hope that the next winter will be as warm as this one.As for coal, it is necessary to rely on the mines of Lviv-Volyn basin, where you can get up to additional 2 million tons, and to buy, for example, in Poland, up to 9 million tons. The rest, about 10 million tons, have yet to be found somewhere. And the mines in Lviv and Volyn should not be closed, where the miners have not been paid since June to August. Purchase and delivery of coal are not easy and require a balanced approach. If we mess things up, like it was with the South African coal, and we will have to buy more expensive coal. Also do not forget about the technical side — transport for its transportation. Large ships cannot deliver it to our ports. Yes, and in the ports should have the appropriate equipment for unloading coal. To develop the infrastructure will take at least 2 years and money. But no one will do that for us.

 

Conversation was recorded by Oleg Makhno